Momentum and High-Beta Equity Factors Lead Market This Year

Stocks

Economic

Summary:

Momentum stocks lead 2025 with MTUM up 19.6%, followed by high-beta SPHB at 18.7%, far ahead of the S&P 500’s 10.7%. Small-cap value lags, while high-dividend VYM hits record highs.

The dominance of the momentum factor roars on. At nearly every step this year, this risk factor has outperformed the broad stock market, based on a set of ETFs through yesterday’s close (Aug. 13). The recent rebound in so-called high-beta stocks has lifted this factor to a strong second-place performer so far in 2025.

The iShares MSCI USA Momentum Factor ETF (NYSE:MTUM) is the year-to-date leader with a 19.6% return. The Invesco S&P 500® High Beta ETF (NYSE:SPHB) is nipping at its heels by rallying 18.7% this year. Both funds are posting a hefty return premiums over the broad market, which is up 10.7% this year via SPDR® S&P 500® ETF (NYSE:SPY).

Momentum and High-Beta Equity Factors Lead Market This Year_1

The rest of the factor field is well behind the momentum and high-beta leaders. Even high-cap growth is struggling to keep up. The iShares S&P 500 Growth ETF (NYSE:IVW) is in third place this year with a 14.2% total return.

The worst-performing factor in 2025: iShares S&P Small-Cap 600 Value ETF (NYSE:IJS), which is flat on the year–a dismal performance considering the broad-based rally elsewhere. As the once popular small-cap value factor continues to lag, questions persist about the validity of this slice of the small-cap universe. The fund has been a lackluster performer in recent years, and the latest results don’t offer any evidence to suggest a change is in the offing.

By contrast, some of the factor funds are showing renewed strength and are worth keeping an eye on. One ETF that’s looking stronger lately: the high-dividend factor (VYM).

Momentum and High-Beta Equity Factors Lead Market This Year_2

The fund rallied sharply yesterday and closed at a new record high, suggesting that investors’ appetite favors relatively high payouts in equities, perhaps because Wall Street is expecting that the Federal Reserve will start cutting rates next month. In that case, dividend payouts will become more attractive if the competitive yields in bonds declines.

Source: investing

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Daniel Carter

Economic

Russia's exports contracted for a fifth month in June as weaker global commodity prices continued to weigh on trade.

Overseas shipments dropped by about 8% from a year earlier after an almost 10% decline in May, according to data from the Bank of Russia published on Thursday. Exports fell 5.9% year-on-year in the second quarter, matching the pace of decline seen in the first three months of the year, the data show.

The slump reflects pressure on Russia's foreign trade from deteriorating conditions on commodity markets, with the central bank saying in July that falling prices were the main driver of the decline. Export prices for Russian oil, which topped $70 a barrel early this year, averaged $56 in the second quarter, according to bank estimates.

Prices are expected to fall further in the second half amid worsening supply-demand balance, including accelerated output growth by OPEC+. The central bank now forecasts an average price this year of $55 a barrel for the nation's oil, down from a previous estimate of $60.

Still, the latest European Union sanctions, billed as "one of its strongest" packages yet, have so far failed to make a major impact. US President Donald Trump's moves against Russian oil buyers and threats of new tariffs have yet to significantly disrupt flows.

The discount of Russia's benchmark crude to global oil prices narrowed to the lowest level since the start of the war in Ukraine, despite moves by the EU to reduce its price cap on Russian oil to $47.60 a barrel from $60.

In the first half of 2025, exports shrank by 5.9% to $196.1 billion, while imports remained stable at $138.7 billion. The current account surplus shrank to $25 billion from $42.1 billion a year earlier on a weaker trade balance and a wider services deficit, the Russian central bank said.

Source: Bloomberg Europe

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Thomas

Political

U.S. President Donald Trump said on Thursday he thought Vladimir Putin was ready to make a deal on ending the war in Ukraine after the Russian president floated the prospect of a nuclear arms agreement on the eve of their summit in Alaska.

Ukrainian President Volodymyr Zelenskiy and his European allies have intensified their efforts this week to prevent any deal between the U.S. and Russia emerging from Friday's summit that leaves Ukraine vulnerable to future attack.

"I think he's going to make a deal," Trump said in a Fox News radio interview, adding that if the meeting went well he would call Zelenskiy and European leaders afterwards and that if it went badly he would not.

The aim of Friday's talks with Putin is to set up a second meeting including Ukraine, Trump said, adding: "I don't know that we're going to get an immediate ceasefire."

Putin earlier spoke to his most senior ministers and security officials as he prepared for the meeting with Trump in Anchorage, Alaska on Friday that could shape the endgame to the largest war in Europe since World War Two.

In televised comments, Putin said that the U.S. was "making, in my opinion, quite energetic and sincere efforts to stop the hostilities, stop the crisis and reach agreements that are of interest to all parties involved in this conflict".

This was happening, Putin said, "in order to create long-term conditions for peace between our countries, and in Europe, and in the world as a whole - if, by the next stages, we reach agreements in the area of control over strategic offensive weapons."

His comments signalled that Russia will raise the issue of nuclear arms control as part of a wide-ranging discussion on security when he sits down with Trump. A Kremlin aide said Putin and Trump would also discuss the "huge untapped potential" for Russia-U.S. economic ties.

A senior eastern European official, who requested anonymity to discuss sensitive matters, said Putin would try to distract Trump from Ukraine at the talks by offering him possible progress on nuclear arms control or something business-related.

"We hope Trump won't be fooled by the Russians, he understands all (these) dangerous things," the official said, adding that Russia's only goal was to avoid any new sanctions and have existing sanctions lifted.

Trump said there would be a press conference after the talks but that he did not know whether it would be joint. He also said that there would be a give and take on boundaries and lands.

Russia controls around a fifth of Ukraine and Zelenskiy and the Europeans worry that a deal could cement those gains, rewarding Putin for 11 years of efforts to seize Ukrainian land and emboldening him to expand further into Europe.

Item 1 of 8 U.S. President Donald Trump looks on as he speaks to the press about deploying federal law enforcement agents in Washington to bolster the local police presence, in the Press Briefing Room at the White House, in Washington D.C., U.S., August 11, 2025. REUTERS/Annabelle Gordon

[1/8]U.S. President Donald Trump looks on as he speaks to the press about deploying federal law enforcement agents in Washington to bolster the local police presence, in the Press Briefing Room at the White House, in Washington D.C., U.S., August 11, 2025.

An EU diplomat said it would be "scary to see how it all unfolds in the coming hours. Trump had very good calls yesterday with Europe but that was yesterday".

SEEKING CLARITY ON SECURITY GUARANTEES

Trump had shown willingness to join the security guarantees for Ukraine at a last-ditch virtual meeting with European leaders and Zelenskiy on Wednesday, European leaders said, though he made no public mention of them afterwards.

Zelenskiy said the security guarantees had been discussed in "considerable detail" in comments after a meeting in London on Thursday with British Prime Minister Keir Starmer.

Friday's summit, the first Russia-U.S. summit since June 2021, comes at one of the toughest moments for Ukraine in a war that has killed tens of thousands and displaced millions since Russia's full-scale invasion in February 2022.

Speaking after Wednesday's meeting, French President Emmanuel Macron said Trump insisted that the transatlantic NATO alliance should not be part of security guarantees that would be designed to protect Ukraine from future attacks in a post-war settlement.

Macron said, however, that Trump had also said the United States and all willing allies should be part of the security guarantees.

Expanding on that, a European official told Reuters that Trump said on the call he was willing to provide some security guarantees for Europe, without spelling out what they would be.

It "felt like a big step forward", said the official, who did not want to be named.

It was not immediately clear what such guarantees could mean in practice.

On Wednesday, Trump threatened "severe consequences" if Putin does not agree to peace in Ukraine and has warned of economic sanctions if his meeting on Friday proves fruitless.

Russia is likely to resist Ukraine and Europe's demands and has previously said its stance had not changed since it was first detailed by Putin in June 2024.

Source: Reuters

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Samantha Luan

Forex

Political

Economic

U.S. President Donald Trump has once again made clear his position on interest rates, advocating for a significant reduction. His remarks have intensified discussions around the Federal Reserve’s (Fed) potential moves, specifically regarding upcoming meetings. Trump has also hinted at potential plans to appoint someone new in place of Fed Chair Jerome Powell, emphasizing his desire for a change in leadership.

Interest Rate Cut Debates

Expectations are mounting in financial markets that the Fed might lower its interest rate at the forthcoming meeting. Amid these rising expectations, Trump has reiterated his call for a rate cut, as he has consistently done in the past. Economists predict that these statements might catalyze new dynamics in financial markets.

In recent months, Trump has persistently argued that policy rates should be lower. His insistence has been driven mainly by an aim to stimulate economic growth, urging the Fed to “strongly” consider rate reductions. He has explicitly stated his desire for rates to be lowered to around 1%.Trump elaborated on this topic, declaring, “Interest rates should be at 1%. Our economy needs this level for sustainable growth.”

Potential Successor to Powell

Trump also mentioned the possibility of announcing a new candidate to replace Fed Chairman Jerome Powell in the near future. This declaration aligns with earlier reports from sources close to the administration indicating discussions with 11 potential candidates. The anticipated shift in Fed leadership is under close scrutiny by financial circles.Following Kugler’s early resignation, Trump suggested Powell might soon follow suit. After receiving no positive response, Trump implied the possibility of litigation by referencing an inflated renovation cost, which hinted at underlying pressure. Powell has yet to comment on this indirect threat.

Many still anticipate a rate cut by the Fed in September. Abnormalities in employment figures suggest a “latent downturn” in the economy. Even members previously unsupportive of cuts are considering them if poor employment figures persist, resulting in a 90% probability of a September cut. Currently, five members favor a cut, though support must grow to at least seven members.Despite Trump’s public statements, the Fed’s independent decision-making process remains intact. However, discussions on potentially eroded independence have emerged due to Powell’s distancing from prior optimism amid political pressure, alongside continuous unfavorable statistics being revised by the Bureau of Labor Statistics (BLS).

Source: CryptoSlate

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Adam

Cryptocurrency

While most cryptocurrencies have been cooling off after the July rally, Ether ETH keeps pushing higher. Having cleared its December 2024 top, ETH now trades around $4,650 — just 4% below its all-time high — and enthusiasm across the crypto market is mounting. That optimism has a clear driver: an unprecedented wave of corporate and institutional buying. Yet with more holders sitting on profits, the risk of a near-term correction can’t be ignored.

The corporate treasury race for ETH

On August 11, bitcoin miner Bitmine Immersion (BMNR) became the first public company to hold over one million ETH — worth roughly $5 billion — after acquiring 20% of its goal to own 5% of the total supply in a single month. The company, in which Peter Thiel holds a 9% stake, is buying at a pace 12 times faster than Michael Saylor’s well-known bitcoin accumulation.

Tom Lee, Bitmine’s Chairman of the Board, called ETH the “biggest macro trade of the next decade” and put a $16,000 price target in his recent CNBC interview.

Others are joining the race. On the same day, online performance marketing firm Sharplink raised $900 million to expand its ETH position. On August 9, Donald Trump’s World Liberty Fund announced plans to buy $1.5 billion in altcoins, with ether making up 87% of his reported crypto holdings.

Ether's rally turns corporate - on the road to $16K?_1

The list of large ETH buyers now includes public companies, DAOs, foundations, and even the U.S. government. ETH is no longer just a DeFi-native asset — it’s appearing on corporate balance sheets and political treasuries.

On the ETF side, inflows are relentless. On Monday alone, they registered inflows of 232,051 ETH, worth nearly $1 billion. Over the past 30 days, inflows have totaled almost $6 billion against just $600 million in outflows, a unique streak in crypto ETF history.

This steady institutional demand acts as a structural bid. Unlike retail-driven rallies of past cycles, today’s move is underpinned by vehicles designed for long-term holding.

ETH technical breakout

On the charts, crypto analyst Gert van Lagen notes that ETH’s weekly candles have broken above a long-term descending broadening wedge, with the next technical target at the all-time high of $4,860.

Ether's rally turns corporate - on the road to $16K?_2

Technical momentum aligns with the fundamental story: constant demand from treasuries and ETFs, a supportive staking model, and upcoming catalysts such as November’s Fusaka upgrade.

On-chain data from Glassnode shows ETH profit realization peaking at $771 million per day in July, above December 2024 levels, and now running at $553 million. Long-term holders are largely holding steady, but short-term investors are realizing far more gains, driving the current wave.

Ethereum overheated?

The market is not without risks, though, even in a strong uptrend. Many short-term traders are locking in gains at current levels. This isn’t necessarily bearish on its own — healthy rallies always see some selling — but if the demand slows, the selling pressure could stall momentum or even send ETH price down.

Also, ETH futures open interest — the total value of outstanding futures contracts — is sitting at an all-time high of nearly $61 billion, according to Coinglass. In such a crowded market, a sharp move in either direction could cause significant turbulence: a short squeeze or cascading liquidations.

If ETF flows slow or treasury buying is front-loaded, price could retrace to the $3,500–$4,000. This zone acted as a strong support during earlier consolidation phases in 2025 and aligns with the kind of 15–25% pullbacks often seen in rallies driven by concentrated flows from ETFs or treasury accumulation before the next leg higher begins.

Ethereum is in the midst of a structural shift. This rally is less euphoric than 2021’s, but the flows are more strategic, the holders more patient, and the capital base far deeper. If the current pace of institutional and treasury accumulation continues, ETH’s supply-demand profile by 2026 could look fundamentally different — and that, more than short-term volatility, is the bullish case.

Source: marketscreener

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Daniel Carter

Economic

Central Bank

A jump in U.S. wholesale prices last month looks to have all but erased the possibility that the Federal Reserve will deliver a jumbo-sized half-percentage-point interest rate cut in September, though expectations for a quarter-percentage-point move next month, followed by another in October, remain intact.

U.S. producer prices rose 0.9% in July amid a surge in the costs of goods but also of services like machinery and equipment wholesaling, the Labor Department's Bureau of Labor Statistics said on Thursday. The increase, which far exceeded economists' expectations, may get passed on to consumers, who so far have not experienced a strong overall increase in prices even as the Trump administration has ratcheted up import tariffs."We expect a stronger pass-through of levies into consumer prices in coming months, with inflation likely to climb modestly over the second half of 2025," said Ben Ayers, senior economist at Nationwide.

The rise in services inflation will be particularly worrisome to Fed policymakers like Chicago Fed President Austan Goolsbee, who said on Wednesday he's on alert for signs that inflation is seeping into prices beyond those for goods affected directly by tariffs. An increase in services inflation, also evident in the consumer price data released on Tuesday, suggests inflation could become a more persistent problem, he said.

U.S. Treasury Secretary Scott Bessent, who is leading the search for a replacement for Fed Chair Jerome Powell, has been pushing for a bigger rate cut next month, citing tame inflation, though on Thursday he said the U.S. central bank could start with a quarter-percentage-point move.

Before the data, traders put about a 3% probability on the idea of a half-percentage-point rate cut, with most bets firmly on a quarter-percentage-point reduction. After the data, traders erased bets on a 50-basis-point move.San Francisco Fed President Mary Daly, who signaled earlier this week that she is increasingly open to the idea of a rate cut given the softening in the labor market, told the Wall Street Journal in a story published on Thursday that a 50-basis-point rate cut would signal an urgency about the job market that she does not feel.

"It has been acting as a bucket of really cool water poured on the heads of those calling for 50 basis points in September," Slawomir Soroczynski, head of fixed income at Crown Agents Investment Management, said after the data.

Rate-sensitive two-year Treasury yields jumped more than five basis points after the data and were last at 3.722%, over three basis points higher than on Wednesday. Benchmark 10-year yields were up about two basis points on the day, at 4.264%.

"The large spike in the Producer Price Index this morning shows inflation is coursing through the economy, even if it hasn't been felt by consumers yet," said Chris Zaccarelli, chief investment officer for Northlight Asset Management.

"Given how benign the CPI (consumer price index) numbers were on Tuesday, this is a most unwelcome surprise to the upside and is likely to unwind some of the optimism of a 'guaranteed' rate cut next month," he said in a note.

The Fed will get another round of inflation data and a fresh jobs report before its September 16-17 policy meeting.

Source: Kitco

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Adam

Central Bank

Economic

Investors are increasingly pricing in a "higher for longer" interest rate environment in the euro zone, with a potential cut in March seen as a temporary blip before borrowing rates climb back above 2%.

A number of market-based measures of rate expectations indicate that investors are growing less concerned about the deflationary impact of tariffs following the recent trade deal between the United States and the European Union.

They're also confident that a sharp increase in fiscal spending in Germany will boost the economy, thereby reducing the need for more rate cuts in the longer term.

Several investment banks, including Goldman Sachs, have revised their forecasts, now anticipating that the European Central Bank has ended its current easing cycle.

While trade risks could still weigh on growth and inflation, these banks believe the ECB, which offered an upbeat assessment of the euro zone economy after its latest meeting, is likely to hold rates at 2% for the foreseeable future.

Erring on the side of caution, markets are pricing in the risk of a pick up in deflationary pressure early next year if tariff negotiations falter, which is showing up as an implied ECB rate cut in March.

In the meantime, the euro has risen by nearly 3% this month as investors increasingly expect the U.S. Federal Reserve to resume rate cuts in September, while the ECB stays put.

"Higher for longer" was a narrative that dominated markets in 2022 and 2023 as central banks grappled with stubborn inflation stemming from the COVID pandemic and Russia's invasion of Ukraine.

Here are some of the market indicators that reflect its return.

ESTR FORWARDS EDGE TOWARDS 2%

Forward contracts on the ECB's official overnight benchmark interest rate, the euro short-term rate (ESTR), imply around a 60% chance of a 25 basis point rate cut by March, and a deposit rate of 1.92% in December 2026.

Investors adopt "higher for longer" view on ECB rates_1

The euro short-term rate forwards (ESTR) reflect expectations for the ECB deposit facility rate

This reflects traders' assumptions about the likely path for monetary policy.

Investors adopt "higher for longer" view on ECB rates_2

The euro short-term rate forwards (ESTR) reflect expectations for the ECB deposit facility rate

“In the short term... there is the potential of inflation undershooting. It's a bit of Trump. It's a bit of economic weakness,” said Carsten Brzeski, global head of macro research at ING.

“Our view is that inflation will remain structurally above 2% in the coming years, driven by fiscal spending and the restructuring of supply chains, which will increase costs for companies,” he said.

He added that policy rates could reach the upper bound of the ECB's official 1.75% to 2.25% range for the neutral rate - that which is neither accommodative nor restrictive - and shift into tightening territory if required.

EURO 5-YEAR ESTR INDEX SWAP HOVERS JUST ABOVE 2%

The euro short-term rate (ESTR) 5-year overnight index swap (OIS) is seen as a barometer of the medium-term monetary policy outlook and can be loosely used as a market-implied gauge of the neutral rate.

The swap rate hit a high of 2.406% in early March, when Germany agreed on the biggest overhaul to its fiscal spending in decades, and has since fallen to around 2.12%, having traded above the 2% mark consistently for the last six weeks.

Investors adopt "higher for longer" view on ECB rates_3

The derivative on the 5-year ECB rate is considered as a key barometer of medium-term monetary policy outlook and can be loosely interpreted as a market-implied gauge of the neutral rate.

“We're a bit more negative on growth than everyone else and a bit more worried about inflation than everyone else,” said Lyn Graham-Taylor, senior rates strategist at Rabobank.

“But we've literally no change for the deposit rate out till the end of 2027,” he added.

EURIBOR RATES SEEN ON A MILD UPTREND IN 2027

The Euro Interbank Offered Rate reflects the average rate at which major European banks lend unsecured funds to one another.

The Euribor rate also captures some credit risk because of the involvement of banks. The curve mirrors that of ESTR forwards, so it also suggests rates could dip modestly by March before rising above 2% again into 2027.

Investors adopt "higher for longer" view on ECB rates_4

Euribor is the rate at which euro zone banks lend to each other on an unsecured basis. The futures contract reflects market expectations for where this rate will be at a specific point in the future

Paul Hollingsworth, head of developed markets economics at BNP Paribas, believes the ECB's next move will be to hike rates in the fourth quarter of next year.

“I see the rate hike as a recalibration within the neutral range...as the balance of data and risks shifts from the drag of tariffs toward a more positive impulse driven by fiscal policy,” he said.